That's the difference between me and you, Frank. I'm never selling; that's why I set up a life insurance policy. Going uh… Zack Townsen, so good to have you joining us on the program. Uh, meanwhile, co-founder of the Bitcoin insurance company… I love having

founders, new founders, particularly folks that you know haven't had on the program before. Um, a lot of people probably listening, they know what Bitcoin is, they know what insurance is, but they maybe don't know what Bitcoin insurance is. Um, walk us through the vision, um, why you

decided to found, you know, start this company and um, how the business… Yeah. Uh, thanks so much, Frank. Happy to be here. So, yeah, we are a life insurance company entirely denominated in Bitcoin. Um, actually, how we started the company is my co-founder and I sat down and we

were saying to ourselves, like, we believe there's going to be a global Bitcoin economy, um, and that economy, um, is going to have all the things the normal economy does and all the… the… the financial institutions, um, that, uh, you know, again, like a country has. I

sometimes think of it like there's this new country in the world, you know, crypto land or whatever you want to call it. And, um, we were creating a list of… like, we're just very comfortable and excited by regulatory BS; it's like something we're… we're good at. So we were like, okay, what

are the financial institutions that need to exist in this economy? And like, there are already exchanges; there's a lot of people working on payments and… um, banks haven't worked very well. If you think like Blackrock is a bank, and… um, we came up with the idea of life insurance and

Immediately, I realized personally that this was something I was interested in. That's because I have two small kids—a three-year-old and a six-year-old—and I own normal life insurance.  I shouldn't say 'normal'; I own *dollar* life insurance to

protect my family and to sort of plan for my future, for their future. I immediately realized that if I really think of Bitcoin as money, if I really think about this as an economy I'm in, this is like a

critical financial service.  We started the company… How's it going? Uh, it's going great, actually. I mean, we've, in some ways, been—I don't want to say lucky, but—we have pretty principled, honest beginnings, and what I just said, which is that we

want to help me plan for my legacy, help a lot of our friends plan for their legacy in Bitcoin. We hadn't quite realized that life insurance and annuities have incredible tax privileges in basically every country in the world that has taxes. So, although life insurance's

first purpose is always protection—like, what happens if you get hit by a bus—its second purpose is planning, thinking about intergenerational wealth transfer, and that just fits so perfectly with a culture of hodling.  Like, I want

to hold this Bitcoin forever, literally for my children. We're like, 'Great, then you should buy a life insurance policy,' and by the way, there are all these tax privileges that come with that. So, yeah, basically what we're seeing is a mix of longtime Bitcoin

Holders who just naturally want to do, um, their financial lives in Bitcoin. They want to plan for their future, for their children, for their legacy in Bitcoin, and those people are just really enthusiastic about what we're building. Then there's another set of people

who candidly are more cynical about Bitcoin. Maybe they're the types of people who, uh, you know, are suddenly buying the ETF; they're thinking about just, you know, Bitcoin being 1, 2, 3% of their portfolio, like

some of these big institutions are suggesting. Then they look at our company and they already know about tax and estate planning and protection planning with life insurance; they already have, you know, comprehensive life insurance policies. Then our policy is like, "Oh, this is the

way I should be holding my Bitcoin." So we have these two populations of people: you know, the crypto purists and the, I don't know, the people who care about tax structuring. Um, and they come together, and it's been a

great start to the company, and you know, having some amazing early policyholders. So how does it work? Is it that the monthly payments are they made in Bitcoin, and then that's sort of like put into some sort of policy, or are the policies

denominated in Bitcoin? Like, what's the process behind it? Yeah. Uh, the policies are entirely in Bitcoin, and our company operates entirely in Bitcoin. So we, I think, are the only company in the world that has permission from our regulator to do

Our audit financials and regulatory filings are all in Bitcoin, as though Bitcoin were a currency—like dollars, Euros, Yen, or Swiss Francs.  And what's great about that, from the company's and our users' perspectives, is that we don't have to worry about price movements.

If you're running a Swiss franc life insurance company, you don't ask yourself every day what the price of the Swiss franc is against the dollar; it just doesn't matter, because your promises, guarantees, and user contracts are all in Swiss francs. That's true for us, too.

People pay their premiums—what they pay us—entirely in Bitcoin, and then we make a fixed, guaranteed promise in Bitcoin terms.

To put some numbers on it, it really depends on your age and health, but for you, Frank, it might look like you pay us one-tenth of a Bitcoin a year for 10 years...

Yeah, get in that state of mind.  Yes, one-tenth of a Bitcoin a year for 10 years. Then we promise you—in that example of one Bitcoin paid over 10 years—that your beneficiaries would get 1.5 Bitcoin.

The additional benefit is that you can take a policy loan; you can borrow value out of the policy over time, and that borrowing is tax-free. So if Bitcoin goes to 700,000, 7 million, or 70 million...

Whatever you think it's going to do, I see 10-15 years from now, even though you're not yet dead, you could borrow that Bitcoin out on a tax-free basis. So it's a way to sort of, and it's capped too, right? Like it's probably like you...

know, I don't know how you can figure it, but like similar to a 401k loan, it's probably like, you know, 30% of the... yeah, so for it exactly. There's sort of like a savings account number in the policy.

Depending on its size, you get all these numbers, right, when you buy the policy, and then you can borrow up to 90% of that value. Um, but the thing is that on that loan, the expectation is actually not that you would ever pay it back; it

is a Bitcoin loan. The expectation is that you will just eventually die, and the loan will be netted against the death benefit. So it's a weird thing, like sort of borrowing from your children, but yeah, instead of borrowing from yourself with like an, like a 401k loan. So I

borrow—let's say I've got, you know, I've contributed one Bitcoin. I want to borrow um, against that Bitcoin, and, you know, let's call it at this current price; I want to have $20,000 of liquidity in that sense after I

borrow that. I'm not making like monthly payments back towards that principal, correct? So in this, in the example you just gave, um, let's say you've put one Bitcoin in. So you're at the end of your 10 years; you put one Bitcoin in, you

Want, uh, $20,000 out, whatever that is. So that's, we'll just call that like 0.2 Bitcoin. Obviously, it's a little less than that. So you borrow out that 0.2 Bitcoin; there's a loan. It's a loan; we're starting to charge you interest, so we're

charging you interest. We're charging you interest, and then, but eventually you will, and then your kids, instead of getting 1.5 Bitcoin in our example, we would net out the loan plus the interest. So the reason that we'll only lend you up to 90% of the value is actually so

that you never owe us more than we owe you, if that makes sense. This isn't like a thing that you would do like every day or every week. This is a thing that like you put some, you put some Bitcoin in this policy; it's really for handling intergenerational wealth, but

if you ever did need to sell some Bitcoin for liquidity, this would be the very best Bitcoin to sell because, one, you wouldn't owe any capital gains tax between now and that sale. So if you think Bitcoin's going to go up a lot, um, that would be great, and the

second thing is that, yeah, you don't actually pay off the loan; you're sort of borrowing against the value that's supposed to go to your beneficiaries. I see. So in one way it's kind of like, you know, come for the, come for the life

insurance policy, but stay for the sort of like tax advantage, um, borrowing. Yeah, we actually have not a ton, but we have some users who like don't even have kids or a wife or a husband; um, they just have a lot of, they have a bunch of Bitcoin.

And they're like, "Well, eventually I'll get married and have kids, but the this loan thing, I should start now." I see. So how do you sort of... what is the sort of... um... how do you sort of think about

the role of an insurance company in the Bitcoin economy?  Suppose, with like, what it looks like in, uh, you know, traditional finance. Does it look different? Does it serve different purposes? Because I think a lot of folks, you know, a lot of listeners might not

understand the size of some of these firms—trillions of dollars. Yeah, yeah. Um, I wouldn't say that it's different in some ways than traditional life insurers. I'd say it's different than any other institutions in crypto, right? So every

life insurer really is doing two things: one is the types of financial services for policyholders that we're talking about, like protection in case you get hit by a bus or, you know, die before you're supposed to. Um, actually, an annuity is all about what

happens to your family if you live longer than you're supposed to, and these tax benefits and estate planning. So that's like the one side. The other side is those... our policyholders are entrusting us with Bitcoin for decades. Um, so we hold on to that Bitcoin,

um, and we have to very conservatively, very prudently, with a ton of risk management, invest that Bitcoin to get Bitcoin yield. We can talk more about that, but as I said, like you're giving us one Bitcoin; we have to turn that into 1.5 Bitcoin over the next 50

years, but that is something entirely new and unique in the crypto ecosystem. Right? So much of crypto, so much of Bitcoin is market making and trading, and basis trades, and like what's happening today, tomorrow, next week, next month. Our job is to think about what's going to happen

next year, next decade, next century. And we are in the market, like capital markets, particularly doing some lending where we are the only people who are able to take that slightly longer perspective, and that is critical. Right? So if you think about the dollar world, there's a yield curve. If you asked me, um,

what's the cost to borrow dollars for 30 years, for 10 years, for 5 years? There's a number you can go look up in the Wall Street Journal. Right? There's a market for that. And currently in Bitcoin, there is a market to borrow overnight or one

month, maybe three months. So one of the things that we're trying to do as an insurance company and are starting to do is, like, we're this boring, conservative company that can look out with duration and be an asset manager that can make investments like that. And that could be

you know, running a Lightning node when it doesn't sort of make sense, or, um, putting some LTV in some new Bitcoin L2s, or or whatever it is where, um, the time horizon is a little bit longer than trading Bitcoin day-to-day. Um, so that's

what we try to do, and that's exactly what New York Life and MassMutual and Northwestern Mutual—like, so much of the physical infrastructure of the world, any of the mortgages generated in the world—these all end up on insurance balance sheets because they have that long

That long-term perspective, it's a tough job. I can imagine just hearing you lay it out, because there's not that existing infrastructure; you're building a lot of these benchmarks. If you were to launch a new insurance company in just traditional markets, you already have a multi-trillion dollar mortgage industry you can work with and pull levers on to get that outsize return over the life of a client.  But you're

kind of building it bit by bit because, actually, yeah, the inter...so we have tons and tons of policies, controls, and regulatory oversight. Some of those policies, like our investment risk policy, we have to write as though we're a normal life insurance

company. And then what we have to do is, every time we're not following the policy, we need to get board approval. So we're like the only insurance company where every one of our investments I actually have to bring to our board, and then I have to go negotiate with my

regulator about what the capital treatment should be. Whereas if you just start a normal life insurance company, you just go buy a bunch of corporate bonds and you're like, okay, well these are triple-B rated and they're worth it, and these are AA-rated and they

weren't. This...so yeah, it's a pain. But I think you're exactly right to go all the way back to: we believe there is, and is going to be, this country called Cryptand. Having these sorts of

Capital markets are critical, and look, our ultimate vision is that if you live in Argentina, Turkey, or Nigeria, you're not engaging in life insurance because you're going to live longer than the Argentinian peso, but you're not going to live longer

than Bitcoin.  Bitcoin is going to be this permanent, global, decentralized store of value, and so that's why we find it so important to do this hard work. But yeah, it took us two years to launch our product, and that was all time setting up governance, risk,

compliance, regulatory relations—like that is what I spend a ton of my time and a ton of our team's time working on. But that's also what makes it important and safe. This might be a dumb question, um, so forgive me, but it seems like this is definitely

and we see this with so many products in crypto—much more advantageous for folks living in the Global South, um, just because they don't have these products and because their currencies are so unstable. Is it fair to say that, like, for someone that maybe is living in

the US, this, you know, makes sense from the liquidity perspective that we talked about—of being able to draw from your Bitcoin in a tax-advantageous way from a tax perspective—um, but if you kind of remove that, which is hard to do because if you have

a lot of Bitcoin, that's probably very—that's a great—that's a great service. But the point—sorry, what you're saying—I mean, what I'm saying is that then it's like, why—what is the benefit of having something denominated in Bitcoin versus

dollars for a life insurance product in the states. I guess, yeah. Well, there's two huge categories: one is if you bought whole life insurance—whatever the product is called—in dollars in 2018 and you had a death benefit of a million dollars,

you have seen the purchasing power of that policy go down 30 or 40% because of inflation in real terms. Whereas if you had bought the same policy in Bitcoin terms in 2018, you would have seen the purchasing power of that policy go up. So, insofar as

Bitcoin is not day-to-day—there's a lot of volatility—but year to year, decade to decade, a better store of value than the dollar is, um, that is one reason that we, I think, have, you know, so many people in the US. The second is, um, and I

don't want to—I don't want to make a whole conversation about, uh, your tax and estate planning—but there, all life insurance policies, like you're—you know, basically you're turning that one into 1.5; that you're getting interest that

interest is compounding tax-free. Um, you would normally owe interest income taxation. Uh, your beneficiaries receive their—their—um—the death benefit tax-free, etc., etc. Um, that is true for all life insurance policies; we just comply with the Internal Revenue Code's requirements to be life insurance, but

the truth is, not many people in the United States would buy dollar life insurance if there were no tax benefits. There are those tax benefits, and you're buying it in a denomination that is increasing in purchasing power, not decreasing in purchasing power. Fair enough. Fair enough.

It kind of speaks to the ethos of Bitcoin, and, I mean, we've seen the meme, right, of the shopping cart that has fewer and fewer things in it with the dollar, and then it goes from a shopping cart to a Lamborghini, or whatever the case may be.

Yeah, if you're 35 and have two young kids, and you're thinking about buying life insurance, and you're not likely to die until you're 70, 80, or 90, how much life insurance should you buy? Well, if you buy

a million dollars of dollar-denominated insurance, a million dollars isn't what it was in 2015, and it certainly won't be what it is in 2065. But you buy a 10 Bitcoin policy, and again, no guarantees, but I see what you're saying; it's a very good point.

Which is, you are...the policy is to dominate in something that's not inflationary. Yes, how is that resonating with folks? And I do wonder, what does this opportunity look like for folks that have never purchased Bitcoin

before? Yeah, they come in...How do they...? Second, yeah, sorry, no, I interrupt you on the second point. I'll be honest, like we are not out there trying to convince people that the first Bitcoin they ever buy should go into our policy.

One, it's just a hard problem, and two, it's also, you know, from a regulatory positioning standpoint, like we don't want to be convincing grannies or whatever that they should buy crypto life insurance. It just...it doesn't feel right, or maybe it...

Doesn't feel right to other people, like, um, well, that makes you less predatory than a lot of other insurance companies. Yeah, so what we what we say to ourselves is, um, yeah, there are so many people who've already made this decision, and more people every day, right? Like we're

we're taping this the week of the election. You're seeing billions and billions of dollars flow into the ETF, and that is a choice by people to put part of their retirement savings in Bitcoin. And whether that's 1% or 3% or

whatever it is, like that is what BlackRock and Fidelity and other people are saying you should do: you should take that amount. So if you've already made that decision, then we're sort of coming at it from behind and saying, well, your life insurance is just

as important as your retirement savings; your annuity is just as important. And, um, for the same reason that you're thinking about Bitcoin as an inflation hedge or a currency protection or whatever you've already decided you should, then use life insurance as the right—another

vehicle, the right planning tool, the right tax optimization tool to, um, to also own some Bitcoin. It's interesting. I have I have two policies through my employer, very standard, right? Dismemberment and and a $100,000 policy. We don't yet offer dismemberment, but it's

on the roadmap. What are we what what what is what is that? Is that like, you know, my hand gets chopped off and then, you know, you can't type anymore; you just can't be a reporter. Frank, hand chopped off, so that would be bad. I mean, I guess

I could probably, like, you know, have it, have it sort of, um, record it, record my voice and transcribe it. But yeah, dismemberment... So wait, we didn't even talk about your background; we just went right straight into it. Did you have life insurance?

That happens to me every day, Frank. People are just like, "I'm so excited to talk about life insurance!" I'm sure people are are are throwing themselves at you on the street to talk about it. Yeah, that's right. So how'd you find yourself here?

Yeah, my co-founder and I are fintech guys by background. So, um, I went through Y Combinator in 2013 with a company called Standard Treasury. It was, we built like banking APIs, banking infrastructure, lots of Know Your Customer (KYC), anti-money laundering stuff. And that company ended up being

bought in 2015 by Silicon Valley Bank, a going concern at the time. Um, and that's actually when I first got really interested in crypto because we had an offer to be bought by Coinbase, which I obviously should have done because I'd have hundreds of

millions of dollars now. Um, but we didn't know that then. It was very small. You can't take it, you can't take it with you. Yeah, yeah. So we—a good Frank Zappa movie—and we... But that... So I received my first Bitcoin like from

Fred, trying to convince me to join Coinbase. And then I, like, just always was interested. It, like, became something I, like, did on the side. I participated in all these, like, you know, well, the whole like normal crypto story. Um, and my co-founder and I were old friends; we met

In 2009, and like every six months, we got together and said, "Is now the time to start a company? Can you leave your job?"  Then we were both available at the same time, and that's, as I said...

When we sat down and said, "What's the list of things we want to build in cryptoland?", and in particular, what companies will be successful in crypto? This was counterintuitive in late 2021. We thought...

The companies that are going to be successful are the ones that can deal with regulation and be well-regulated. That has, I think, been a thesis that's really going to pay off for us. Um, but yeah, so I'm a fintech entrepreneur by background. I worked at a...

few other startups. I led fintech at a large North American consulting practice, um, and then started the company about three years ago. Now, yeah, fair enough. Um, so what do the next three years look like?

Yeah, yeah. I think the two big things we're working on is, um, you know, earlier this year we moved from a regulatory sandbox to a full commercial license. So we graduated, and that allows us to, one, expand the geographies of people we serve. So we are working to launch in...

all the countries you can imagine. Um, you know, we have to build know-your-customer infrastructure and anti-money laundering measures. So we're slowly becoming more available globally so other people can buy our products. And the second thing is that we're expanding.

The types of products we sell: right now, the product I described is called Whole Life because they last your whole life. Our product is a 10-pay, meaning you pay in 10 equal installments over 10 years. There are different

versions of that. I've mentioned a few times the idea of an annuity. You mentioned dismemberment, that's far away, but there's a term life and accidental death benefit. So what we're going to do is... there's a whole suite of

pretty standard, pretty comprehensible products that insurance companies offer, again, both on the life insurance side and on the savings and retirement side in annuities and other deferred products.  And we're going to slowly but surely launch those additional products so that people all

over the world can plan for their legacy using all the tools you have in Trafi, but in Bitcoin. What do you think are some of the challenges in achieving some of these goals, and how do you overcome them?

Yeah, look, our biggest challenge, on some level, is nobody wants to think about dying and nobody wants to engage in a long conversation about tax planning. So, you're putting together two of the most

un-riveting, not riveting, but sort of turn-off topics. What do they call them? Red flags. Death and crypto... it's like religion at the dinner table. Yeah, it's politics and religion at Thanksgiving. So I think our biggest

The challenge is, you know, we've overcome tons of regulatory challenges and product challenges, and now it's just meeting people literally one-on-one, talking to them, making them comfortable, and getting them excited about doing something that's inherently

not particularly exciting. Um, yeah. And then I would say the other big challenge is just normal startup challenges: we need to find amazing people, build great technology, and get more investors in our cap table to realize our vision. Um, but all those things I think are surmountable.

I wake up every morning ludicrously early because that's just how I am, and then I, without enough sleep, get on my computer and work more. I'm super excited about what we've built and excited to bring it to more policyholders all over the world.

Amazing. Where can listeners learn more if they've listened to this show and want to sign up? Where can we send them?

Here's how Meanwhile is trying to unleash the multitrillion dollar insurance industry onto bitcoin

The Block

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